Former Hedge Fund Manager Gets Probation For Galleon Assist

Feb 4 2010 | 1:45pm ET

A former hedge fund manager convicted of insider-trading was sentenced to three years probation today after prosecutors said his cooperation helped bring down the alleged Galleon Group insider-trading ring.

Mark Lenowitz helped lead authorities to David Slaine, identified this week as a government mole whose cooperation—which included wearing a wire—led to the arrests of seven of the 21 people charged in the Galleon case, including two former Galleon employees, Zvi Goffer and Craig Drimal. Slaine himself, who pleaded guilty to fraud charges in December, is a former Galleon employee.

Goffer, Drimal and the five others they were arrested with, three of which have hedge fund ties, have pleaded not guilty. Galleon founder Raj Rajaratnam and former New Castle Partners executive Danielle Chiesi have also denied any wrongdoing. Eight people have pleaded guilty in the case so far.

Lenowitz, who pleaded guilty two years ago, did not wear a wire, prosecutors said. He has been cooperating with authorities for more than two years.

U.S. District Judge Sidney Stein said he had planned to send Lenowitz to prison. But he was convinced of the value of Lenowitz’s cooperation, and instead ordered probation—including six months of home confinement—and the forfeiture of $337,000, as well as 160 hours of community service each year.

Lenowitz, who worked for hedge funds Chelsey Capital and Q Investment Partners, was one of 14 people charged in a 2007 insider-trading case. At the time, it was the largest insider-trading case ever brought by U.S. authorities. Slaine also worked at Chelsey Capital.

Of the 14 people charged in the older case, only Slaine awaits sentencing. All pleaded guilty and most received sentences of probation.


In Depth

Q&A: Sancus Capital And The Disruption Of The CLO Market

Oct 5 2017 | 6:28pm ET

Traditional collateralized loan obligation (CLO) funds in the U.S. market can offer...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Finding Success as Alternatives Converge

Oct 9 2017 | 4:00pm ET

Rising interest among institutional investors over the past several years has led...

 

From the current issue of